10 ms·

My parents earn together ~90k, just bought a house and travel about 4 weeks a year through all of europe and still support us three kids. So thats not true, at

by patall 6y ago

My parents earn together ~90k, just bought a house and travel about 4 weeks a year through all of europe and still support us three kids. So thats not true, at least not if you are living in a smaller city. And for places like Berlin or Munich, 50k a year would be ridicoulously low. CEO in a start-up in Berlin told me a few month ago that they are hiring poeple with literally 2 to 3 coursera courses in machine learning for around 60k, more experienced people rather in the range of 90k. Big corp like Bayer will hire you with a PhD starting around 120k (as analyst without further responsebilites, team managers obviously get more). Given the Copay on Retirement and Health Insurance, that equates to an US salary of around 150k USD. Quite a bit lower than SV, but not as bad as some people want to make it.

pheug 6y ago
You get 401k match and health insurance at any good employer in the US too. As well as much lower taxes. German taxes are just batshit crazy, second only to Belgium. How people can afford to FI/RE with these taxes and pay is beyond me. Oh wait they don't! One of the lowest median wealth per adult in western Europe!
- realityking 6y ago
  I‘m not saying you‘re wrong, but the media wealth statistic are heavily distorted by two facts 1. our retirement systems is based on a generational contract, not capital 2. home ownership is very low If you control for both the results would look very different. Now #2 obviously causes a huge issue in terms of generational wealth.
  - pheug 6y ago
    > 1. our retirement systems is based on a generational contract, not capital You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? Yeah, that's one legitimate retirement strategy. It's very popular in poor countries e.g. ex-USSR where I'm from. Personally I'm more of a fan of US-style self-made retirement. It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). But not so in Germany and much of Europe. > 2. home ownership is very low Isn't that roughly same as saying people aren't wealthy enough to afford one? So if you "control" for this factor, you're just selecting the richer subset of people.
    - realityking 6y ago
      > You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? It's not based on a generational contract within the same family (i.e. my kids pay my retirement) but society wide. Instead of saving up capital I pay the retirement benefits of the current generation and when I retire the then current workforce will pay mine. For the calculation of median wealth this shows up as a big fat 0 (no capital) but it gives me significant financial safety of having a set income from the age of 67 to the end of my life, no matter how old I get. Shit system if you die at 68 (or even earlier), amazing system if you live to be 95. The existence of this system is largely based on WW2. There was no capital to pay for people at retirement age in the 50s so the current system was developed. > It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). The US has always been a very individualistic society and it' s probably the best country in the world to be rich in. For tech workers in FAANG it's a great place to be. If I look at the long tail of workers I shudder. The living condition of the working class is far, far worse than what I see in north/west Europe. Of course there's poverty here too but at a very different level. Personally, I'm happy to pay my taxes and social insurance obligations so I don't have drive past tent cities on my way to work. > Isn't that roughly same as saying people aren't wealthy enough to afford one? Well I'd control for it by excluding the value of your residency from the household wealth. Your original post was commenting on median wealth compared to other Western European countries. I'm merely pointing out that this is too simplistic a number to compare without context.
      - pheug 6y ago
        I ran the numbers and I don't think it's as amazing as you describe: From what I could quickly find online (correct me if I'm wrong), the theoretical maximum pension you can get today is 3034 EUR/month, starting from the age of 67. With current life expectancy you're going to enjoy it for only about 15 years on average. To get it, you need to work for 45 years straight earning at least 82800 EUR each year and paying whopping 18.6% of that (incl. employer part) for the privilege to be part of this amazing system. Let's look at net present value as of retirement age of both sides of the equation: for r in [1.07, 1.05, 1.012]: # discount factor for y in [15, 30]: # years to live print('%.3f %d %.0f %.0f' % (r, y, sum(82800*0.186*r**i for i in range(45)), sum(3034*12/r**i for i in range(y)))) #discount factor, years to live, NPV contributions, NPV payout 1.070 15 4400768 354813 1.070 30 4400768 483414 1.050 15 2459510 396798 1.050 30 2459510 587664 1.012 15 911856 503038 1.012 30 911856 923662 No matter how you slice it, the answer seems to be the same: you pay way more into the system than you get out of it. Only under rather unrealistic assumptions that you can't get more than ca. 1% investment return for 45 years(!) and you're going to live till almost your 100th birthday(!) do you approach a break-even point

by patall 6y ago

pheug 6y ago

You get 401k match and health insurance at any good employer in the US too. As well as much lower taxes. German taxes are just batshit crazy, second only to Belgium. How people can afford to FI/RE with these taxes and pay is beyond me. Oh wait they don't! One of the lowest median wealth per adult in western Europe!

realityking 6y ago
I‘m not saying you‘re wrong, but the media wealth statistic are heavily distorted by two facts 1. our retirement systems is based on a generational contract, not capital 2. home ownership is very low If you control for both the results would look very different. Now #2 obviously causes a huge issue in terms of generational wealth.
- pheug 6y ago
  > 1. our retirement systems is based on a generational contract, not capital You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? Yeah, that's one legitimate retirement strategy. It's very popular in poor countries e.g. ex-USSR where I'm from. Personally I'm more of a fan of US-style self-made retirement. It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). But not so in Germany and much of Europe. > 2. home ownership is very low Isn't that roughly same as saying people aren't wealthy enough to afford one? So if you "control" for this factor, you're just selecting the richer subset of people.
  - realityking 6y ago
    > You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? It's not based on a generational contract within the same family (i.e. my kids pay my retirement) but society wide. Instead of saving up capital I pay the retirement benefits of the current generation and when I retire the then current workforce will pay mine. For the calculation of median wealth this shows up as a big fat 0 (no capital) but it gives me significant financial safety of having a set income from the age of 67 to the end of my life, no matter how old I get. Shit system if you die at 68 (or even earlier), amazing system if you live to be 95. The existence of this system is largely based on WW2. There was no capital to pay for people at retirement age in the 50s so the current system was developed. > It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). The US has always been a very individualistic society and it' s probably the best country in the world to be rich in. For tech workers in FAANG it's a great place to be. If I look at the long tail of workers I shudder. The living condition of the working class is far, far worse than what I see in north/west Europe. Of course there's poverty here too but at a very different level. Personally, I'm happy to pay my taxes and social insurance obligations so I don't have drive past tent cities on my way to work. > Isn't that roughly same as saying people aren't wealthy enough to afford one? Well I'd control for it by excluding the value of your residency from the household wealth. Your original post was commenting on median wealth compared to other Western European countries. I'm merely pointing out that this is too simplistic a number to compare without context.
    - pheug 6y ago
      I ran the numbers and I don't think it's as amazing as you describe: From what I could quickly find online (correct me if I'm wrong), the theoretical maximum pension you can get today is 3034 EUR/month, starting from the age of 67. With current life expectancy you're going to enjoy it for only about 15 years on average. To get it, you need to work for 45 years straight earning at least 82800 EUR each year and paying whopping 18.6% of that (incl. employer part) for the privilege to be part of this amazing system. Let's look at net present value as of retirement age of both sides of the equation: for r in [1.07, 1.05, 1.012]: # discount factor for y in [15, 30]: # years to live print('%.3f %d %.0f %.0f' % (r, y, sum(82800*0.186*r**i for i in range(45)), sum(3034*12/r**i for i in range(y)))) #discount factor, years to live, NPV contributions, NPV payout 1.070 15 4400768 354813 1.070 30 4400768 483414 1.050 15 2459510 396798 1.050 30 2459510 587664 1.012 15 911856 503038 1.012 30 911856 923662 No matter how you slice it, the answer seems to be the same: you pay way more into the system than you get out of it. Only under rather unrealistic assumptions that you can't get more than ca. 1% investment return for 45 years(!) and you're going to live till almost your 100th birthday(!) do you approach a break-even point